ISLAMABAD: Amid a dissenting note from the Sindh member, the National Electric Power Regulatory Authority (Nepra) on Friday notified an additional fuel cost adjustment (FCA) of Rs4.85 per unit to be charged to consumers of ex-Wapda distribution companies (Discos) in April to mop up Rs 37.7 billion.

“The authority has approved a positive FCA of Rs4.8530/kWh, having an impact of around Rs37.7bn, Nepra announced. Interestingly, the regulator had previously concluded an additional FCA of Rs 4.68 per unit on March 31 due to breach of power plant order of merit but has now accepted the justifications being fuel constraints.

“The adjustment of an increase of Rs4.853/kWh will apply to all categories of consumers except vital consumers of all ex-Discos,” reads the notification posted here. He asked the Discos that said adjustment be shown separately in consumers’ bills based on units consumed in February and reflected in the April bill.

Utilities to charge additional Rs 38 billion to consumers in April

Discos, through the Central Power Purchasing Agency (CPPA), had requested an increase of almost 117% (Rs 4.95 per unit) in their fuel price adjustment from the benchmark fuel cost – Rs 4.25 per unit (kWh) – for electricity they were selling in February to raise around Rs38.4 billion in additional funds. The regulator, however, allowed an increase of Rs4.84 per unit after minor tweaks here and there.

On behalf of Discos, CAPP had claimed that consumers were charged a benchmark fuel cost of Rs 4.25 per unit in February, but the actual cost turned out to be Rs 9.21 per unit , hence an additional charge of about 4.95 rupees per unit. unity to consumers.

Nepra VP and member Sindh Rafique A. Shaikh, however, disagreed with the regulator’s pricing calculations, saying the cost of fuel mismanagement and non-availability of the required RLNG could not. be passed on to consumers and also expressed reservations about the purchase. power from IPPs whose power purchase agreements had not been approved by the regulator.

The higher electricity rates would be billed to all consumers in the current billing month (April), except those using less than 50 units per month. This tariff does not apply directly to KE consumers, although part of it then becomes part of KE’s tariff adjustments due to its importation from the national grid.

The regulator said it observed that power from more expensive oil-fired power plants had been generated to the tune of more than 11.3 billion rupees in February, although Nepra had repeatedly ordered the companies concerned to provide a Full justification for deviation from Economic Merit Order (EMO), showing hourly production as well as financial impact of deviation from EMO.

Officials explained that due to non-availability of RLNG as required, electricity was generated by RFO/HSD based power plants, therefore the regulator decided not to deduct any amount this month due to a violation of EMO.

It has become increasingly common for government and regulator approved benchmark fuel costs to turn out to be highly unrealistic, a question mark over their economic and financial analysis capabilities. In recent months, actual fuel costs have ranged from 56% to 117% above the benchmark rate. This results in sudden price shocks for consumers due to monthly fuel adjustments in addition to repeated increases in base electricity rates, apparently at the behest of foreign lenders.

The data showed that the share of domestic fuel sources in overall electricity production in February was robust (46%). The share of hydroelectricity in the overall basket improved to 18.22 pc in February against only 5.83 pc in January.

Posted in Dawn, April 16, 2022